25 years ago today, the US stock market had an unprecedented one day crash, falling ~23% on Black Monday — the largest one day decline in any market in history.

All investors should be at least one part market historian — toward that end, here is a round of the television, media, books, academic papers and reviews of what happened on October 19, 1987.

 

Newspaper headlines:


Source: WSJ

 


Source: NYT

 

• Video from television:
…..-Evening News the day of the crash, October 19th, 1987
…..-Louis Rukeyeser, Wall Street Week, Friday October 23, 1987

• Books: Tim Metz wrote the definitive book on the 87 crash:
…..-Black Monday: The Catastrophe of October 19, 1987 . . . and Beyond
I found it tremendously helpful when I was doing my research for Bailout Nation.

• Academic Papers:
…..-Robert Shiller, Investor Behavior in the October 1987 Stock market Crash: Survey Evidence, NBER (PDF).
…..-Mark Carlson, A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response, Federal Reserve Board, Divisions of Research & Statistics and Monetary Affairs (PDF).
…..-Kenneth R. French, Crash-Testing the Efficient Market Hypothesis, University of Chicago

• Remembrances:
…..-Art Cashin’s 25th Anniversary of Black Monday discussion
…..-Crash of ’87 Recollections: ‘My Singularly Worst-Day Ever’, Paul Vigna, MarketBeat
…..-Rob Fraim: One traders 1987 experiences
…..-2011 Crash Remembrance

• Video Retrospectives:
…..-WSJ, Remembering Black Monday Crash of 1987
…..-NYT, Black Monday After 25 Years

 

• End of day screen shot, October 19, 1987

Courtesy of Helene Meisler,  @hmeisler

 

• Study: Intra-day S&P fall on October 19th:

Source: Federal Reserve Board

>

• NYT front page headline:

STOCKS PLUNGE 508 POINTS, A DROP OF 22.6%; 604 MILLION VOLUME NEARLY DOUBLES RECORD; Does 1987 Equal 1929?

As stock prices soared this year, a chorus of pessimists warned that 1987 was looking more like 1929, when a stock market crash helped to usher in the Great Depression. Yesterday, after a plunge reminiscent of the worst days of 1929, one pressing question was whether the aftershocks would be as devastating to individuals and the nation.

The quick answer, many economists say, is no. The huge losses on Wall Street constitute a substantial blow to the economy at large. But there are many safeguards in place today -some instituted directly in response to the Depression – that would tend to prevent the cascading financial collapse that characterized the crash, impoverishing millions of Americans.

“A stock market crash doesn’t ripple out into the economy with the same force” as it did in 1929, said Geoffrey H. Moore, director of the Center for International Business Cycle Research at Columbia.

 

 

• Intra-day Dow fall on October 19th:

Source: Wikimedia

Category: Cycles, Markets, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “25th Anniversary Black Monday 1987 Crash”

  1. Tutti says:

    My father lost everything in the crash. He never recovered financially or emotionally from it.

  2. ironman says:

    And for a more modern analysis of 1987′s Black Monday event….

  3. PeterR says:

    Great column from Art Cashin. Thanks.

  4. [...] OK, last 1987 link, I swear – Ritholtz collects the best charts and original articles and TV coverage from that day.  (TBP) [...]

  5. Dennis G says:

    Well done, Barry… very, very well done.

    - Dennis Gartman, Editor/Publisher
    The Gartman Letter

  6. flocktard says:

    I remember being a wise ass kid on this day. I called my broker at Kidder Peabody (no easy feat to get a hold of him) and bought as much GE stock I could- maxed myself out. By the following Spring, my portfolio had not only recovered (along with a good deal of the rest of the market) but now I was a single young man with a considerable amount of money to spend.

    My broker’s words on the trade: “Kid, ya got guts- and guts deserve to be rewarded.” I never forgot that.

  7. yon’ Ritholtz,

    (OT) from the ‘out ‘n about’, I’ve been hearing, from those that keep ‘an Ear to the Rail’, many positive things about your, recent, Confab (on the 10th)..

    back, toward the Post, nice ‘rundown’/’wrap-up’/retrospective..~

    though, more seriously, do You think that ‘We’ will, ever, get the ‘full-account’ of ~how Broke(-n) “Wall St.”, really, was–from the ‘aftermath’ of “the Crash”?

    past all that, as always, Keep on, keepin’ on~

    http://www.thefreedictionary.com/keep

    (Intransitive Verbs, gotta luv’em..~)

    http://search.yippy.com/search?query=Keep+Definition&tb=sitesearch-all&v%3Aproject=clusty

  8. the pearl says:

    I love Part II of the Louis Rukeyser video where Louis directs a letter he received from a viewer to the Merrill Lynch board member about setting up a separate exchange without big block and computer trading! The letter writer laments about how the little guy doesn’t have a chance, etc. etc. This is priceless. It is was back to the future as the letter writer sounded just like the majority of daily comments on Barry’s blog about HFT and the little guy getting screwed. Took effort back than to throw a tantrum as you probably had to hand write it and put a stamp on it. The more things change the more they stay the same. You can’t make this stuff up. The clueless retail investor has played the role of helpless victim since the beginning of time. Oh, the horrors of Big Block Trading and Portfolio Insurance!

  9. sureseam says:

    Was in there for the crash when it hit the London market – worked in a market maker (stock jobber) at the time.

    The gales overnight came very close to blowing my apartment windows in. In the morning there were trees down and many trains didn’t run – I was close enough to walk in. At that time, back in the day, I was working on a real time dealing system and everything was color coded. That day there was unremitting red across screen after screen. The rumor was that the traders had zeroed almost all their positions ahead of the Monday and that if they hadn’t then the company would have folded before the Tuesday. The lack of trading volumes thereafter effectively killed the project I was working on.

  10. DSS10 says:

    That brings back memories watching the little green numbers on my Reuters screen turn over like an altimeter on a crashing plane. I can remember the whole office watching waiting for the bounce that never came that day.

    25 years, I’m starting to feel frigging old….

  11. A says:

    The videos were very entertaining. And educational.

    The biggest lesson from it: too many of us choose not to learn from history.

    Joni Mitchell may not have realized it, but she had written the perfect anthem for the stock markets:
    The Circle Game.

    It’s time for everyone to dust off Graham’s ‘The Successful Investor’, and prepare for the pending buying opportunity as we complete the latest rotation of the jagged-edged circle.

    Or, simply buy a mutual fund, and pray.

  12. NoKidding says:

    At least back then some brokers had the decency to self-defenestrate. Now they just hide under their desk.

  13. theexpertisin says:

    At that time, Wall Street Week with Louis Rukeyser was just about the only nationwide investment program that was widely watched and respected.

    Rukeyser was a voice of reason and always looked out for the interests of the retail investor. His calm and reasoned approach to the world of securities steadied many an investor in the days after the crash of ’87, and during both bull and bear markets fore and aft. Those of us who regularly watched his show gained valuable insights on securities previously reserved for the pros.

    In the present world of blabber, yellouts and “gotcha” financial reporting and commentary I miss Rukeyser, and dismiss the Cramer’s.

  14. techy says:

    Can it happen today? how shall we be prepared?

    I feel that it is such a low probability event that nobody buys any insurance(OOTM puts for .1% of your portfolio)?

  15. jaymaster says:

    Great compilation.

    I remember that like it was yesterday. I graduated from college and started my first real job in June of 87. I opened an account at Vanguard in August, and bought my first mutual fund in September.

    The crash scared the bejeebus out of me, especially as I watched some of the old timers in my office freak out over losing so much.

    My first instinct was to buy into it. But my strategy at the time was dollar cost averaging, so I just took a deep breath and made my normal monthly buy at the end of the month.

    But the lesson of that day gave me the courage to go long in a big way in 2008-9.

  16. jpmist says:

    Quite a pang of nostalgia seeing what the WSJ front page used to look like. Am about to cancel my print subscription since I saw the WSJ article on ear wax earlier this week. . .

  17. StatArb says:

    I remember calling OTC market makers who wouldn’t pick up the phone
    I remember sending orders to our NYSE floor brokers , who couldn’t find bids/offers as 39 specialist firms had no capital left
    I remember having unfilled orders , sitting on my desk for days , before receiving bad “prints”

    This was the beginning of the end for the NYSE and OTC market-makers , as the business became more and more computerized

    In the early 2000′s , I fired traders from 7 trading desks as they weren’t needed anymore . Our whole OTC effort at one firm was let go , and we sold one of our NYSE seats

  18. Giovanni says:

    Had a front ‘throne’ seat to that terrible day, worked at Hutton then but was home sick with the flu. Watched/listened to it all go down on FNN, feeling so bad that I couldn’t go into work and ‘help’. Of course as others have pointed out it was a huge buying opportunity with the possible exception of Shearson/Lehman who bought Hutton and we know how that all turned out…

  19. VennData says:

    When the “guns don’t kill people” crowd loudly objects to computer trading, it makes me laugh almost as much as the “Get gov’t off my back” people doing it.